Consumer Products

L'Oreal sales growth slows; exchange rates cited

ChristinaPassariello

PARIS--French cosmetics giant L'Oreal SA (OR.FR) said Monday that sales in the fourth quarter inched up just 0.6% due to exchange-rate fluctuations in some of the markets that are critical to its growth.

L'Oreal, home to brands including Lancome, Garnier and Kiehl's, said sales during the last quarter totaled 5.76 billion euros ($7.85 billion), up from 5.73 billion euros a year earlier. It marked a reversal from faster growth in the first half, pulling full-year sales growth down to 2.3% at 22.98 billion euros.

"In an economic context that is still marked by uncertainties, particularly on the monetary front, L'Oreal is confident in its ability to outperform the market once again in 2014," Chief Executive Jean-Paul Agon said in a statement, highlighting the impact of currency fluctuations.

Currency moves cut 3.7% off of L'Oreal's sales last year, the company said. For instance, Brazil, a major cosmetics market, has seen the value of its currency drop sharply in recent months. Countries such as Brazil, China and India, with their billions of potential new consumers, are critical to L'Oreal's growth ambitions.

Mr. Agon added that he expects L'Oreal's sales and profits to grow this year, but didn't provide specific forecasts.

Sales fell in all of L'Oreal's emerging-markets zones in the fourth quarter--Asia Pacific, Latin America and Eastern Europe. However, on an organic basis, stripping out exchange-rate changes, each zone grew. L'Oreal highlighted slower growth in China, where it recently decided to pull its mass-market Garnier brand because it wasn't performing well enough.

Much of the current interest surrounding L'Oreal is about its capital, not about its cosmetics sales. Nestle SA owns a 30% stake in L'Oreal and is free to sell or increase it as of the end of April, a move that could shake up control at the world's biggest cosmetics company. In its earnings release, L'Oreal didn't refer to any potential shareholding change.

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